City of London Police consider alleged fraud at Von Essen

The City of London Police are considering evidence which suggested fraud took place at Von Essen Hotels, prior to the company going into administration with debts of more than £250m.

Ernst & Young, who took control of the company on 20 April, have submitted a report to the police, alleging falsified accounting. Although Ernst & Young would not comment, a spokesman for City of London Police said they were considering the information that had been presented to them.

On Saturday The Times reported that Von Essen, under the leaderships of chairman and founder Andrew Davis, kept two parallel sets of accounts: one that accurately reflected the company's earnings and one that inflated key figures.

According to The Times, the report alleges "false information was also used to draw down part of a £30m hotel capital expenditure facility. It questions why a sum of £10m was diverted to a project to build a hotel at London Heliport that was separately owned by Mr Davis."

In a report to creditors, lodged with Companies House last month, Ernst & Young indicated that Von Essen attempted to cover up the extent of its financial difficulties. When accountants tried to carry out an independent business review (IBR) of the business, three months before the group went into administration, senior management "restricted the IBR team's access to information and personnel. There were also no management accounts and the full-year 2010 draft financial statements had not been prepared."

Meanwhile, the deadline for bids for the 27 Von Essen hotels up for sale, which is being handled by Christie & Co, is tomorrow.

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Von Essen founder Andrew Davis puts townhouse up for sale >>

Cliveden tops the price tag on Von Essen hotels >>

By Janet Harmer

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